Record Number of Fund Managers Say Stocks Are Overvalued, Survey Finds

The net share of fund managers who say they are overweight stocks doubles from August, according to Bank of America’s monthly poll. (AFP via Getty Images)

Key Points

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• A Bank of America survey showed the net share of investors who believe global equity markets are overvalued hit a record high of 58% in the September.
• Despite overvaluation concerns, the net share of managers who are overweight stocks doubled to 28%, a seven-month high.
• BofA’s investor sentiment measure has risen since April, fueled by hopes of trade war resolution and rate cuts.

Professional investors may believe stocks are expensive, but that doesn’t mean they’re selling, a survey published Tuesday showed.

The net share of investors who believe global equity markets are overvalued hit a record high of 58% in the September reading of Bank of America’s monthly poll of global fund managers. The firm has run the survey for over three decades and has asked that particular question since the late 1990s.

Even so, the net share of managers who said they are overweight stocks doubled to 28% this month from 14% in August. That allocation is just a tick above the long-term average, but it marks a seven-month high.

BofA’s all-in-one measure of investor sentiment, meanwhile, continued to rise since President Donald Trump’s April 2 “Liberation Day” tariff announcement shook markets earlier this year. The bulls, BofA’s analysts wrote, are “feasting on trade war ending, rate cuts starting, bond yields to rise.”

Why all the bullishness if valuations are so excessive? Some of the story is about long-term trends, the survey results indicated. With the exception of a few momentary blips, the net share of BofA respondents who view global equities as overvalued has been positive—and rising—for over a decade.

That move has closely tracked an actual rise in prices: The S&P 500 traded at 22.2 times forward earnings at the end of August, well above the 30-year average of 17 times, according to J.P. Morgan . Valuations have climbed steadily for almost 15 years outside of a pandemic-era spike.

But fund managers also tend to think their particular stock allocations aren’t so risky even if the rest of the market is in a frenzy, data show.

Since the turn of the century, BofA survey respondents on net have almost always said they’re taking lower levels of risks relative to their benchmark. In September, a net 15% of those polled said they are taking lower than normal risks.

Of course, clients may welcome a bit of risk-taking—whether managers believe they are doing it or not—if equities keep performing the way they have the last three years. The S&P 500 is up 12% in 2025, with the index on pace for its third straight year of double-digit gains.

Write to Nate Wolf at nate.wolf@barrons.com